This post was last updated on October 7th, 2014 at 01:51 pm.
This is the last of our four-part series on the unique IconCMO linking feature between your contributions module and your accounting system. Your contributions-accounting links give you
- the power to accurately record contributions and accounting entries at the same time,
- the power to clearly account for donation revenues,
- and the power to honor donors’ trust that their contributions will be used according to their wishes.
Part 1 deals with the basics of how to set up your links.
Part 2 shows the results you can get with your financial reports and contribution statements.
Part 3 elaborates on the flexibility of the linking feature and shows how it can be used to record donations from a special event.
Now in part 4, we’ll look at how you can use IconCMO’s accounting link to record pass-through donations.
What do I mean by pass-through? These are donations that the church collects on behalf of another organization.
Let’s run through a standard pass-through scenario. We’ll say our fictional church from parts 1-3 is collecting monetary donations on behalf of a food pantry.
- Joe Smith gives $80 and Mary Jones gives $40 on April 21.
- The church deposits the $120 into its Wonderful National Bank checking.
- The church writes out a check for the full $120 to the food pantry on April 25.
We need an accounting fund to designate the money that’s to be passed on to the food pantry. I’ll call it “Food Pantry Pass-Through” and create it in General-Ledger: Funds: Fund Maintenance.
The big difference between this and other kinds of donations is that we don’t use a revenue account. The donations aren’t really the church’s revenue. The money is owed to the food pantry, so when it comes in, it needs to be recorded as a liability. To create the liability account, I’ll go to General-Ledger: GL: Chart of Accounts and click on ‘Add New Account’ in the upper right. Here’s how to set up the liability account to link it to the contributions.
Now we’ll create a contribution fund in Contributions: Management: Cont-Maintenance. The contribution fund is what will show up on the givers’ contribution statements.
First we’ll make the fund.
Then, we’ll select our new contribution fund and click the ‘Accounting Link’ button to set up our accounting link. It should be set up as shown below.
Now, we can record contributions for the food pantry by creating a batch in Contributions: Batches: Enter.
Below, you can see what the accounting entry looks like when we post our contribution batch. The highlighted region shows that
- $120 is debited to the Wonderful National Bank checking account.
- $120 is credited to the Food pantry pass-through liability account.
- This is recorded in the Food Pantry Pass-Through accounting fund.
Now our Food Pantry Pass-Through accounting fund has a $120 balance for the check book and a $120 liability to pay off. When you write your check out for the food pantry, you’ll want to be sure to debit the Food pantry pass-through liability account and choose the Food Pantry Pass-Through accounting fund.